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Goodman IndustriesYear Stock Price Dividend 2013 $25.88 $1.73Landry Incorporated Stock Price Dividend$73.13 $4.50 78.45 4.35 73.13 4.1385.88 3.75 90.00 3.38 83.63 3.00Market Index Includes Dividends17495.97 13178.55 13019.979651.05 8403.42 7058.962012 22.13 2011 24.75 2010 16.13 2009 17.06 2008 11.441.59 1.50 1.43 1.35 1.28Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.Use the following information for questions 1 through 4:The Goodman Industries? and Landry Incorporated?s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends.1. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average annual returns for the two stocks and the index. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and then dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2008 because you do not have 2007 data.)2. Calculate the standard deviations of the returns for Goodman, Landry, and the Market Index. (Hint: Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.)3. What dividends do you expect for Goodman Industries stock over the next 3 years if you expect the dividend to grow at the rate of 5% per year for the next 3 years? In other words, calculate D1, D2, and D3. Note that D0 = $1.50.4. Assume that Goodman Industries? stock has a required return of 13%. You will use this required return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for 3 years, and then sell it for $27.05, what is the most you should pay for it?

\fQuestion 1 Year 2013 2012 2011 2010 2009 2008 Good man Industries Stock Price Dividend Capital gain $25.88 $1.73 $3.75 $22.13 $1.59 ($2.62) $24.75 $1.50 $8.62 $16.13 $1.43 ($0.93) $17.06 $1.35 $5.62 $11.44 $1.25 Return ($) $5.48 ($1.03) $10.12 $0.50 $6.97 Return (%) 24.76% -4.16% 62.74% 2.93% 60.93% Landry Incorporated Year Stock Price Dividend Capital gain Return ($) Return (%) 2013 $73.13 $4.50 ($5.32) ($0.82) -1.05% 2012 $78.45 $4.35 $5.32 $9.67 13.22% 2011 $73.13 $4.13 ($12.75) ($8.62) -10.04% 2010 $85.88 $3.75 ($4.12) ($0.37) -0.41% 2009 $90.00 $3.38 $6.37 $9.75 11.66% 2008 $83.63 $3.00 Market Index Year Return (%) 17,495.9 2013 32.76% 7 13,178.5 2012 1.22% 5 13,019.9 2011 2010 2009 2008 34.91% 7 9,651.05 8,403.42 7,058.96 14.85% 19.05% Question 2 Year 2013 2012 2011 2010 2009 Standard deviation Good man industries 24.76% -4.16% 62.74% 2.93% 60.93% 31.44% Question 3 Dividend growth rate D0 D1 D2 D3 5% $1.50 $1.58 $1.65 $1.74 Question 4 Required rate of return Dividend growth rate D0 D1 D2 D3 Terminal value Maximum to pay now 13% 5% $1.50 $1.58 $1.65 $1.74 $27.05 $22.64 Landry incorporated -1.05% 13.22% -10.04% -0.41% 11.66% 9.71% Market Index 32.76% 1.22% 34.91% 14.85% 19.05% 13.82% 1 Good man Industries Year Stock Price Dividend 2013 $25.88 2012 $22.13 2011 $24.75 2010 $16.13 2009 $17.06 2008 $11.44 $1.73 $1.59 $1.50 $1.43 $1.35 $1.25 Capital gainReturn ($ $3.75 $5.48 -$2.62 -$1.03 $8.62 $10.12 -$0.93 $0.50 $5.62 $6.97 2 Year Good man industriLandry incorporatMarket Index 2013 24.76% -1.05% 32.76% 2012 -4.16% 13.22% 1.22% 2011 62.74% -10.04% 34.91% 2010 2.93% -0.41% 14.85% 2009 60.93% 11.66% 19.05% Standard deviation 31.44% 9.71% 13.82% 3 Dividend growth rat D0 D1 D2 D3 4 Required rate of retu Dividend growth rat D0 D1 D2 D3 Terminal value Maximum to pay no 5% $1.50 $1.58 $1.65 $1.74 13% 5% $1.50 $1.58 $1.65 $1.74 $27.05 $22.64 Return (%) 24.76% -4.16% 62.74% 2.93% 60.93% Landry Incorporated Year Stock PriDividendCapital gReturn ($Return (%) 2013 $73.13 $4.50 -$5.32 -$0.82 -1.05% 2012 $78.45 $4.35 $5.32 $9.67 13.22% 2011 $73.13 $4.13 -$12.75 -$8.62 -10.04% 2010 $85.88 $3.75 -$4.12 -$0.37 -0.41% 2009 $90.00 $3.38 $6.37 $9.75 11.66% 2008 $83.63 $3.00 Return (%) Market Index Year 2013 2012 2011 2010 2009 2008 Return (%) ### 32.76% ### 1.22% ### 34.91% ### 14.85% ### 19.05% ###